Presentation Transcript

1. PPS231S.01Law, Economics, and Organization

   Spring 2012 V. Social Norms
2. Social Norms The theory of social norms we will develop in this course is articulated around the following idea: Social norms emerge evolve so as to minimize transaction costs and maximize wealth. For example, how does a finders-keepers norm minimize transaction costs? Most of what we discuss here can be found in Ellickson’s (1991) book.
3. Social Norms The System of Social Control We want to understand why and how most people everywhere cooperate most of the time. In what social contexts and with what content informal norms emerge to help people achieve order without law? We will develop a taxonomy of methods through which individuals control themselves and one another.
4. Social Norms The System of Social Control A system of social control is defined as consisting of rules of normatively appropriate behavior. These rules are enforced through sanctions, the administration of which is itself governed by rules. We will distinguish between two types of sanctions, five controllers that administer sanctions and make rules, and five types of rules.
5. Social Norms The System of Social Control Social control employs both rewards and punishments – carrots and sticks – to influence behavior. Enforcers usually apply rules that divide behavior in three categories: Good (“prosocial”) behavior, which is to be rewarded; Bad (“antisocial”) behavior, which is to be punished; and Ordinary behavior, which warrants no response.
6. Social Norms The System of Social Control Ellickson: “Baseball fans cheer a shortstop’s fielding gems, boo his errors, and sit on their hands when he handles a routine ground ball.” Rules are usually set so that “ordinary” behavior encompasses most of the conduct that occurs. This reduces the cost of administering sanctions – what is most common requires no response.
7. Social Norms The System of Social Control Ellickson distinguishes between five controllers that may be sources of both rules of behavior and sanctions to back up those rules: one first-party, one second-party, and three third-party controllers. An actor who imposes rules and sanctions on himself is exercising first-party control. A principal-agent relationship is a system of second-party control – the agent agrees to the principal’s rules. Third-party control is s.t. parties may not agree with the rules.
8. Social Norms The System of Social Control The rule that emanate from first-party controllers are referred to as personal ethics. Those from second-party controllers as contracts. Among third-party controllers, we refer to rules that emanate from social forces as norms; those from organizations as organization rules; and those from governments as law. Here, we will emphasize law and norms.
9. Social Norms The System of Social Control A guideline for human conduct is a rule only if the existence of the guideline actually influences the behavior of those to whom it is addressed or of those who detect others breaching the guideline. The best evidence that a rule is operative is the routine administration of sanctions – rewards or punishments – upon people detected breaking the rule.
10. Social Norms The System of Social Control Ellickson: “A criminal statute that prohibits unmarried adults from fornicating is not a rule as that term is used here if detected violators are not regularly punished.” A rule can exist even though the people influenced by it are unable to articulate it. For example, children can learn a language without knowing the rules of grammar.
11. Social Norms The System of Social Control
12. Social Norms The System of Social Control There are five types of rules. 1. Substantive rules are the core of a system of conduct. They define what behavior is to be punished, left alone, or rewarded. 2. Remedial rules drive the magnitude of rewards and punishments. For example, one would exhaust less drastic measures before resorting to violence.
13. Social Norms The System of Social Control 3. Procedural rules govern how controllers obtain and weigh information before deciding whether to administer sanctions in particular instances. For example, how much negative evidence must one accumulate before being entitled to spreading negative gossip about another’s wrongdoing? 4. Constitutive rules govern the internal structure of controllers. For example, a right of veto is one such rule.
14. Social Norms The System of Social Control 5. Controller-selecting rules determine when to apply which rules. In the Shasta County case study that Ellickson uses to build his theory of social norms, a controller-selecting norm tells residents to use norms and self-help to resolve cattle-trespass disputes, and not to refer those disputes to the legal system.
15. Social Norms The System of Social Control A general theory of social control should predict the content of society’s rules. More specifically, it would predict which events trigger sanctions, what the sanctions are, how controllers gather information, and which controller administers sanctions in each instance. This is no small challenge. Ellickson’s goal is more humble – illuminate the workings of informal control.
16. Social Norms A Hypothesis of Welfare-Maximizing Norms This is really the crux of Ellickson’s argument. Ellickson articulates his theory around fieldwork that he conducted in rural Shasta County, California – a place where a large part of the behavior of cattle ranchers is dictated by subtle norms of behavior rather than by actual, written-down rules.
17. Social Norms A Hypothesis of Welfare-Maximizing Norms Norms in Shasta County seemed consistently utilitarian. Each appeared likely to enhance the aggregate welfare of residents. This led to the following hypothesis: “Members of a close-knit group develop and maintain norms whose content serves to maximize the aggregate welfare that members obtain in their workaday affairs with one another.”
18. Social Norms A Hypothesis of Welfare-Maximizing Norms More simply, the hypothesis predicts that members of tight social groups will informally encourage each other to engage in cooperative behavior. We have seen this version of the hypothesis earlier this semester: Norms encourage people to cooperate in (repeated) Prisoner’s Dilemma situations.
19. Social Norms A Hypothesis of Welfare-Maximizing Norms Ellickson himself acknowledges that this is hardly novel. For legal scholars, the hypothesis may conjure up Posner’s controversial hypothesis that the common law evolves in a “wealth-maximizing” direction (Posner’s use of wealth is Ellickson’s use of welfare). Ellickson’s hypothesis is independent, because it deals with norms, not (judge-made) laws.
20. Social Norms A Hypothesis of Welfare-Maximizing Norms The hypothesis runs counter to a number of intellectual traditions. For example, it challenges Hobbes and other legal centralists who have exaggerated the role of the Leviathan, as it implies that order can emerge without law.
21. Social Norms A Hypothesis of Welfare-Maximizing Norms It also challenges the view of scholars such as Jon Elster, who regard many norms as dysfunctional. The hypothesis is also inconsistent with Marxism and other views that see norms as serving the narrow interests of some members of a group, presumably at the expense of some bigger group. Finally, it opposes the belief that norms are contingent, symbolic, and unrelated to costs and benefits.
22. Social Norms A Hypothesis of Welfare-Maximizing Norms Of course, Ellickson warns, the hypothesis is not a blanket normative recommendation that social controllers (exclusively) use norms as rules: Many environments are not close-knit (e.g., an airport bar); Norms that add to the welfare of a group can impoverish outsiders (e.g., racial segregation of Jim Crow era); and Welfare-maximization has limited normative appeal.
23. Social Norms A Hypothesis of Welfare-Maximizing Norms Three key terms in the hypothesis require further discussion: welfare maximization, workaday affairs, and close-knit group. Let’s look at each one in turn. Regarding welfare maximization, the hypothesis assumes that, by nature, people want more satisfactions. Here, welfare includes more than mere materialistic possessions – e.g., parenthood, leisure, good health, high social status, close personal relationships, etc.
24. Social Norms A Hypothesis of Welfare-Maximizing Norms Rules of behavior develop so as to share more welfare in the aggregate, so members must develop metrics for appraising the costs and benefits of alternative arrangements. Note: the hypothesis is cast in terms of welfare – not utility – maximization because norm-makers must employ objective appraisals. Market prices, although a crude measure of value, can be objectively measured.
25. Social Norms A Hypothesis of Welfare-Maximizing Norms In the absence of prices, norm-makers can obtain rough values by observing the terms of voluntary second-party exchanges between group members. Ellickson: The objective burden a certain rancher bore in taking on additional boundary-fence maintenance is a rough measure of how much he valued his neighbor’s keeping an eye on his house while he was on vacation.
26. Social Norms A Hypothesis of Welfare-Maximizing Norms If the members of a group want the largest objective pie to divide, they should want their norms to work to minimize the sum of deadweight losses and transaction costs they objectively incur when interacting with one another. For example, they would want to engage in more enforcement to encourage cooperation only if they expect the marginal gains from additional cooperation would exceed the marginal costs of enforcement.
27. Social Norms A Hypothesis of Welfare-Maximizing Norms This calculus explicitly incorporates transaction costs. This means that the hypothesis offered here predicts not only that the members of a close-knit society would tend to cooperate in the Prisoner’s Dilemma – it also predicts that, on the rare occasions where some would defect, the least costly forms of punishment would be applied.
28. Social Norms A Hypothesis of Welfare-Maximizing Norms Regarding workaday affairs, note that welfare-maximizing norms are not predict all the time. Norms are predicted to be welfare-maximizing only for regular matters. The hypothesis does not apply to the ground rules that enable group members to engage in exchange and to purely distributional norms (e.g., norms of charity).
29. Social Norms A Hypothesis of Welfare-Maximizing Norms Regarding ground rules, only voluntary exchange provides trustworthy evidence of objective values. To prevent coerced exchange a society must develop ground rules that forbid threats – rules against murder, maiming, and enslavement. Ellickson assumes that a close-knit group has such exogenous “foundational” rules, legal or otherwise, that endow and secure basic rights enough so as to support voluntary exchange.
30. Social Norms A Hypothesis of Welfare-Maximizing Norms Regarding redistribution, the hypothesis is such that when members of a close-knit group develop norms to govern workaday situations, the content of the norms is not influenced by distributive considerations. Ellickson: A poor person would not be excused from a general obligation to supervise cattle, and a rich person would not, have greater fencing obligations, consistently with Shasta county.
31. Social Norms A Hypothesis of Welfare-Maximizing Norms And what about close-knit groups? The hypothesis is agnostic about other social settings. A group is close-knit when informal power is broadly distributed among group members and the information pertinent to informal control circulates easily among them. Ellickson note that one cannot overcome this vagueness due to the richness of individual social settings.
32. Social Norms A Hypothesis of Welfare-Maximizing Norms Ellickson notes, however, a few advantages of close-knit groups. The first is the future power to administer sanctions. The prospect of unavoidable future encounters can provide these opportunities. The continuing relationship that law-and-society scholars assert abets cooperation is analogous to repeated play in game theory.
33. Social Norms A Hypothesis of Welfare-Maximizing Norms Close-knit groups also provide members with information about the past and present – embezzlers exploit the ignorance of their employers. Cross-cutting webs of dyadic relationships help maintain a gossip network through which to pass information about how members acted in the past. They also allow sharing information about past consensual exchanges that are key in assessing the values required in determining norms.
34. Social Norms A Hypothesis of Welfare-Maximizing Norms Lastly, an individual can be a member of several close-knit groups: neighborhood, workforce, religious group. Memberships need not overlap. A group also does not need to be small to be close-knit.
35. Social Norms A Hypothesis of Welfare-Maximizing Norms The hypothesis is, in principle, falsifiable. One can measure the variables that affect close-knittedness. Ellickson: if three black and three white firefighters in a racially polarized union were adrift in a well-stocked lifeboat in the middle of the Pacific, the social environment would have become close-knit and they would be predicted to cooperate. Many movies are based on that idea.